No actually the delusion is that it will go with no repercussions, dilution delusions are running rampant, just accepting dilution does not make it right or legal. And the calculations will be very much part of the class action lawsuit after. those numbers will be a HUGE part of the light at the end of the legal tunnel. I wonder if Ackman knows this too?
Thanks Nats. No one on the DJT team or Ackman has indicated that there is a plan in which the UST would own less that 79.9% of the GSEs. The most promising litigation right now on behalf of common is the Brydon Fisher litigation which is highly unlikely to survive since it has already been dismissed several times. I was surprised that Ackman believes that only 2.5% of Tier 1 capital will be needed. The CBO has two papers out with valuation scenarios, and I believe the best case is 3% capital which may result in more dilution more that what Ackman may be assuming. Of course potential purchasers can assume that the warrants will be eliminated but there does not seem like it is being considered by the DJT team at this point. DJT was clear in his Letter to Rand Paul that the US Taxpayer would make a lot of money from the recap. There are some on this Board that tried to scare shareholders in the coercive recap where common would be 10cents and there are some that believe that the UST will not at least keep 79.9% - both seem highly improbable. It will be interesting to see what Ackman assumes for dilution and the time line for capital raises which may impact how much dilution will actually occur.
So, you are saying that the GSE's will have no option to buy back the warrants, which the government purchased for next to nothing. And, are you also saying that the government will be collecting quarterly dividends for the warrants they "purchased "?
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